Citigroup Inc.

The following table reflects the incremental impact of adopting SFAS166/167 on Citigroup’s GAAP assets, liabilities, and stockholders’ equity.In billions of dollars January 1, 2010AssetsTrading account assets $ (9.9)Investments (0.6)Loans 159.4Allowance for loan losses (13.4)Other assets 1.8Total assets $137.3LiabilitiesShort-term borrowings $ 58.3Long-term debt 86.1Other liabilities 1.3Total liabilities $145.7Stockholders’ equityRetained earnings $ (8.4)Total stockholders’ equity (8.4)Total liabilities and stockholders’ equity $137.3The preceding tables reflect: (i) the portion of the assets of formerQSPEs to which Citigroup, acting as principal, had transferred assets andreceived sales treatment prior to January 1, 2010 (totaling approximately$712.0 billion), and (ii) the assets of significant VIEs as of January 1, 2010with which Citigroup is involved (totaling approximately $219.2 billion) thatwere previously unconsolidated and are required to be consolidated underthe new accounting standards. Due to the variety of transaction structuresand the level of Citigroup involvement in individual former QSPEs and VIEs,only a portion of the former QSPEs and VIEs with which Citi is involved wererequired to be consolidated.In addition, the cumulative effect of adopting these new accountingstandards as of January 1, 2010 resulted in an aggregate after-tax chargeto Retained earnings of $8.4 billion, reflecting the net effect of anoverall pretax charge to Retained earnings (primarily relating to theestablishment of loan loss reserves and the reversal of residual interests held)of $13.4 billion and the recognition of related deferred tax assets amountingto $5.0 billion.The impact on certain of Citigroup’s regulatory capital ratios of adoptingthese new accounting standards, reflecting immediate implementation ofthe recently issued final risk-based capital rules regarding SFAS 166/167, wasas follows:Non-Consolidation of Certain Investment FundsThe FASB issued Accounting Standards Update No. 2010-10, Consolidation(Topic 810), Amendments for Certain Investment Funds (ASU 2010-10)in the first quarter of 2010. ASU 2010-10 provides a deferral to therequirements of SFAS 167 where the following criteria are met:• the entity being evaluated for consolidation is an investment company, asdefined, or an entity for which it is acceptable based on industry practiceto apply measurement principles that are consistent with an investmentcompany;• the reporting enterprise does not have an explicit or implicit obligationto fund losses of the entity that could potentially be significant to theentity; and• the entity being evaluated for consolidation is not:– a securitization entity;– an asset-backed financing entity; or– an entity that was formerly considered a qualifying special-purpose entity.Citigroup has determined that a majority of the investment vehicles managedby it are provided a deferral from the requirements of SFAS 167 as they meetthese criteria. These vehicles continue to be evaluated under the requirementsof FIN 46(R) (ASC 810-10), prior to the implementation of SFAS 167.Where Citi has determined that certain investment vehicles are subject tothe consolidation requirements of SFAS 167, the consolidation conclusionsreached upon initial application of SFAS 167 are consistent with theconsolidation conclusions reached under the requirements of ASC 810-10,prior to the implementation of SFAS 167.Tier 1 CapitalTotal CapitalAs of January 1, 2010Impact(141) bps(142) bps137